A loss instead of a profit is described as a negative return. Rate of return is a profit on an investment over a period of time, expressed as a proportion of the original investment. The time period is typically a year, in which case the rate of return is referred to as annual return. To compare returns over time periods of different lengths on an equal basis, it is useful to convert each return into an annual equivalent rate of return, or annualised return. This conversion process is called annualisation, described below.

A loss instead of a profit is described as a negative return. Rate of return is a profit on an investment over a period of time, expressed as a proportion of the original investment. The time period is typically a year, in which case the rate of return is referred to as annual return. To compare returns over time periods of different lengths on an equal basis, it is useful to convert each return into an annual equivalent rate of return, or annualised return. This conversion process is called annualisation, described below.